Wednesday, September 12, 2012

After Industrial and Commercial Bank of China (ICBC), its the Bank of China (BOC) which is planning its entry into Pakistan according to the sources at Dawn Media Group. Exit of western banks such as Royal Bank of Scotland (RBS), HSBC and Citibank which is closing its commercial operations in the country and the entrance of Asian giants from China and India suggest changing dynamics of banking industry in Pakistan more focusing towards trade, industrialization and investment rather consumerism.

The Industrial and Commercial Bank of China (ICBC) currently has one branch in Karachi and Islamabad each and is the world’s biggest bank by capitalization while BOC, in which the Chinese Sovereign Wealth Fund holds a substantial stake is headquartered in Beijing, providing corporate and personal banking services in addition to investment banking.

The expanding bilateral trade between Pakistan and China has attracted Chinese financial market giants, which are already present in many countries including Africa, to mark their presence in Pakistan. Currently Pakistan's local giants such as HBL, UBL, ABL and MCB depends upon government papers for profitability and the entrance of Chinese banks suggest changing of this trend.

Analysts suggest that this move by Asian banks will also help China to tap the potential of Arabian markets as they have large investments in Pakistan though they are not expanding their operations and large middle eastern groups such as Emaar and Enshaa have failed to deliver on their promises.

Opening up of Indian banks will also help India increase its trade with Pakistan, Afghanistan and Central Asian republics.

It is worth mentioning here that Pakistan has recently signed Currency swap agreement with China and Iran.